The BBA is now integrated into UK Finance. Please go to www.ukfinance.org.uk for new content and updates from UK Finance.
Material published by BBA prior to 1st July 2017 is still available on this website.
From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.x
Regulations have always demanded a lot from financial services firms, but in recent years this has become more complex: the number of regulations’ firms have to comply with is increasing; the burden of proof against such regulations is increasing; and the need to supply ever more granular data is increasing.
Due to their very nature, financial services firms generate and store vast amounts of data. Data is held in a variety of disparate legacy and new systems and is generally only joined as needed to satisfy specific business outcomes. With exponentially increasing data volumes, making sense of data from different systems is becoming an increasingly more complex and time consuming task.
To a certain extent it is understandable that, to date, most organisations have taken a reactive approach to regulation, setting up projects to meet the specific needs of each regulatory requirement (e.g. Stress Testing, IFRS 9, CRD IV, BCBS 239) as it has come along. This siloed data management approach however is fraught with danger:
Whilst the regulators would argue that sufficient time is allowed between regulatory requirements being finalised and data submissions being required, the implementation process at organisations (translate requirements and assess how they apply to their own working practices; set up projects to deliver against the requirements; produce, test and supply the required data submissions) often result in last-minute first submissions. It is not unusual for first data submissions to also have required a number of manual processes.
Significantly, once an initial data submission has been made, organisations are very reluctant to change their mechanisms for producing subsequent refreshes of the same data for fear of introducing discrepancies and then having to spend time explaining away the differences.
Whilst organisations may perceive current regulatory requirements as being onerous, they actually are not as regulators currently accept data submissions in the format of management information reports rather than granular data. However it will not be too long before regulators have the ability to receive, hold and process individual data entities. Irrespective of the level at which data is required, it is fundamental that organisations be able to trust data quality and prove data lineage for each individual data item, whether this data is provided discretely, aggregated or provided as a component of a calculation.
A best practice approach to developing a strategy for data management in regulatory compliance includes: data integration, data quality, master data management, data governance and data analytics. Each of these pillars supports financial services firms in complying with regulatory objectives, including information access, processing and storage.
Financial firms must transform their data management approach to unlock data from its silos, incorporate unstructured information from non-traditional sources, and integrate information whether on-premises, in the cloud, batch-based, or real-time.
The new battleground for fighting each of these varying and unique regulations is best practice data management, as it enables companies to effectively manage the complete data lifecycle and also establishes a foundation for rapid and reliable compliance initiatives. In addition, a foundation for compliance based on a solid data management strategy will reduce the cost of managing new regulations and can result in a clear and competitive capital advantage.
As stated earlier, organisations are reluctant to change procedures and processes once initial data submissions have been made, almost irrespective of how inefficient these processes are at producing the required regulatory datasets. The good news is that through the use of experienced practitioners who understand both Credit Risk business functions and IT, it is possible to take an evolutionary approach to data management for regulatory compliance resulting in not only more efficient, consistent and trusted data submissions but also the foundations of more efficient, consistent and trusted data from which to gain commercial advantage.
Our industry-leading data management approach brings data sources and systems together and lets you cleanse, transform, and shape data for all your business purposes – whether for Business Intelligence (BI), complying with regulations or managing risk.